A gene has been isolated from an activated T cell library that appears to encode a novel low molecular weight GTP-binding protein that demonstrates approximately 20 percent homology to c-Ha-ras. This gene has been designated RAI-1 for transcriptionally induced ras-related protein. RAI-1 codes for a 35 kdalton phosphoprotein that contains consensus GTP binding elements, although the G-3 element is imperfect. RAI-1 has been shown to preferentially bind GTP over ATP. RAI-1 differs from c-ras proteins by the presence of amino and carboxy-terminal extensions and the absence of an acceptor site for isoprenylation. RAI-1 message is transiently expressed in mitogen-activated cells of various lineages. RAI-1 appears to be associated with the endoplasmic reticulum, most likely through an association at the cytoplasmic face. The GTP-binding property of RAI-1 in addition to its phosphorylation (which can often be regulatory for function) suggest the possibility that RAI-1 is a signal transducing protein associated with communication between the lumen of the ER and the cytoplasm.